Below is the ‘Tip of the Week’ from Ep66: From Angel Group to Venture Fund, Part 2 (Maia Heymann)
We began the conversation by disucssing Maia’s experience as an institutional LP, selecting venture funds to invest in. And the key decision criteria for her was why did the GP think that they could attract the best and brightest entrepreneurs. Repeat entrepreneurs. Is that founder coming back to the same firm and specifically the same partner. This was a key indicator for her that if the investor provides real value, treats the startup fairly and will continue to attract the top founders. And ultimatley, what prompted Maia and the group’s change from angel group to venture fund was the need to attract the best and brightest entrepreneurs.
Quality dealflow is always a challenge. And in today’s climate, investors must differentiate. Capital is not a differentiator.
So, what’s your unique value-add? Why will entrepreneurs want totake your money over others? Are you a hunter or a gatherer? If you’re a hunter, where are you finding the startups before anyone else does? If you’re a gatherer, why is your network passing the best deals to you instead of others?
As Maia said, the number one driver of investor returns is high quality dealfow. It’s very likely that one or two companies in the portfoliowill drive all the returns.
So… where do you hunt? How do you gather? Why does your value exceed that of others?
Hope is not a strategy. And those investors w/ no differentiation, thinking the best deals will appear in their inbox; may be hoping for a long time.